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Financial Services under GST Financial Services:  Financial services are the economic services provided by the finance industry, encompassing a wide array of organizations that manage money. This includes but is not limited to credit unions, banks, credit card companies, insurance companies, accountancy firms, consumer finance companies, stock brokerages, investment funds, and government-sponsored enterprises. These services play a crucial role in helping individuals and businesses manage their financial resources effectively, fostering growth and success. GST and Financial Services The Goods and Services Tax (GST) introduced in India has significantly impacted the financial services sector. GST is an indirect tax that has replaced many previous indirect taxes in India. It is divided into several tax slabs, with each product or service falling under a specific slab. Financial services, under the GST regime, attract a standard rate of 18%, classified under the SAC (Services Accounti...

Impact of GST on Advances received While finalizing the books of accounts, the auditor should review the impact of GST liability on advances received and whether the said liability has been discharged as per the provisions of the GST Act. Generally, advances can be classified as set out below:  (a) Security Deposits: These are utilised by the supplier only on occurrence of a contingent event. In case such even does not occur, then the security deposit will be refundable to the customer on completion or according to the terms and conditions of contract agreement. Generally, such deposits are not taxed under GST. However, in case of happening of the contingent event and consequent adjustment of security deposits, the same shall be taxable under GST (b) Retention Money: Retention money is the sum of money (generally a percentage of the contract value) held back by the customer as a safeguard for any defective or non-conforming work by the contractor. As per the GST law, the contractor...

Zero Rated Supply under GST Under the GST framework, the concept of zero-rated supply is of significant importance, especially for businesses engaged in exports and supplying to Special Economic Zones (SEZs). Zero-rated supply refers to the supply of goods or services that are either exported or supplied to SEZs and are not subject to GST in India. The main objective behind zero-rating supplies is to promote exports and SEZs, which play a vital role in the Indian economy. Exports of goods and services have always been a critical driver of economic growth and development, and the zero-rated supply provisions under GST provide a significant boost to Indian exporters by enabling them to compete in the global market. Furthermore, zero-rating supplies to SEZs help in creating a conducive environment for businesses and promoting investments in the SEZs. Zero-rated supply in GST: Concept and legal framework Zero-rated supply refers to the supply of goods or services that are exempted from GST...

GST on capital goods According to section 2(19) of the CGST Act Capital Goods means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business. Input Tax Credit on Capital Goods To avail input tax credit for the Capital Goods the following conditions, in addition to conditions as stated under section 16(2) of the CGST Act, are to be fulfilled. 1. The Capital Goods has been capitalised in books of account of the person and 2. The Capital Goods are used or intended to be used in the course or furtherance of business. The conditions as stated under section 16(2) of the CGST Act are as under: 1. The registered person is in possession of Tax Invoice. 2. The registered person has received Capital Goods. 3. The tax charged on such capital goods has been paid and  4 The GST Return has been filed in regard of such of Capital Goods by the Supplier. The further ...

Credit notes and debit notes under GST Section 34 of the CGST Act plays a crucial role in regulating credit and debit notes in the context of goods and services. Section 34: Credit and debit note Section 34(1) of the CGST Act pertains to credit and debit notes. The extract of the section is provided below: “Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.” According to the section 34, a supplier has the option to issue a credit note with GST (referred to as “GST credit note”...

Intermediary – under GST Intermediary – a person who arranges/facilitates the supply between two persons in common parlance. As per   Act, Intermediary means a broker, an agent, or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account. Service Provider: Intermediary/Agent/Broker. Service Recipient: Any person (In India / Outside India). Supply: Facilitation of main supply   Why is Intermediary service an area of concern for taxpayers? Why do not companies want to be classified as intermediary? Why is it unjust to tax intermediary as per taxpayers? The Company carrying on business for recipients in non-taxable territory want to buy the reliefs of exports for themselves. If they get classified as intermediary, the place of supply falls in taxable territory by the speci...